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December 21, 2007

Effective PFM Technical Assistance

The IMF, donors, and beneficiary countries: a unique tri-partite partnership for an efficient and effective provision of technical assistance

Posted by Teresa Daban

Experience has shown that technical assistance is most valuable and most effective when those who supply it and those who seek it work closely. Therefore, the Fund is increasingly seeking to build strong partnerships with beneficiary countries and donors for the provision of technical assistance. These partnerships are increasingly important in light of the large number of parties interested in PFM reform, numerous providers of technical assistance, and the high transactions costs that technical assistance imposes on recipient countries. But what are the benefits of working together? And what are the costs of poor coordination? What are the lessons from existing partnerships between donors, the Fund and recipient countries? This brief post summarizes the discussion on these questions included in the recently published IMF Survey On-Line Magazine article on Mozambique.

What are the benefits of working together in the provision of technical assistance? All parties involved, the Fund, donors and recipient countries benefit from working together. Coordination between the Fund and donors reduce the administrative burden of technical assistance, and thus free administrative and political capacity and foster ownership of beneficiary countries. Donors, and also recipient countries, in turn benefit from the high quality of the Fund's technical assistance, which is informed by the experience and knowledge gained by the Fund across diverse countries at different levels of development. The Fund also benefits from providing its technical assistance on the basis of a more inclusive dialog and consistent with the recipient countries' development strategy.

What are the costs of poor coordination? The costs are significant. In case of poor coordination there is a danger of duplication of efforts, waste of resources and even mutual obstruction. In addition, poor coordination could lead to conflicting, confusing and poor advice to recipient countries, as well as discourage the recipient countries' commitment with the recommended reforms.

What are the lessons from existing partnerships between donors, the Fund and countries that receive technical assistance? There are numerous examples of successful strong collaboration between the Fund, donors and countries receiving technical assistance. The donor-supported program of budget reforms in Mozambique provides a particularly vivid illustration of the 'virtuous circle' resulting from a combination of strong commitment and ownership by the authorities, the donors' sustained and coordinated support, and the high quality of the technical assistance provided by the Fund. Another example of strong partnership between donors, the Fund and recipient countries are the Fund's Regional Technical Assistance Centers (RTACs). The RTAC's steering committees, comprising representatives from beneficiary countries, donors and the Fund, have served well to ensure strong ownership and accountability to all stakeholders.